Cryptocurrency Versus Real Estate. What’s the best wealth strategy?
It is the practice and study of techniques for secure communication. The use and practice of cryptography have been around for a while since the development of rotor cipher machines in World War I and the advent of computers in World War II. The methods used to carry out cryptology have become increasingly complex and its application more widespread.
Bitcoin is the most famous of all cryptocurrencies. In January 2009, the bitcoin network came into existence with the release of the first open source bitcoin client and the issuance of the first bitcoins, with Satoshi Nakamoto mining the first block of bitcoins ever (it’s known as the genesis block), which had a reward of 50 bitcoins. There are currently close to 4.3 million bitcoins left that aren’t in circulation yet. With only 21 million bitcoins that will ever exist, this means that there are about 16.7 million bitcoins currently available. Out of those 16.7 million, it is estimated that 30% of those may be lost forever as a result of things like hard drive crashes and misplaced private keys.
Bitcoin mining is a process by which transactions are verified and added to the public ledger, known as the blockchain. It is also the means through which new bitcoins are released (anyone with access to the internet and suitable hardware can participate in mining). The mining process involves compiling recent transactions into blocks and trying to solve the computationally difficult puzzle. The participant who first solves the puzzle gets to place the next block on the blockchain and claim rewards.
Recent headlines say:
²“Got some bitcoin burning a hole in your digital wallet? And paradise on the mind?
You could use it to buy a second passport. Vanuatu, the South Pacific archipelago of some 80 islands, will now let outsiders use the volatile cryptocurrency to apply for so-called investment citizenship. Fork over the equivalent of about $350,000 and your family of up to four can receive passports from what the New Economics Foundation, a Britain-based think tank, calls the fourth-happiest country in the world.”
We believe it’ll become taxed (just like GST was added to ALL sales on the internet).
Ask yourself, when something like the internet was first invented and then circulated, how did the Australian Government get the agreement of millions of overseas sellers? How did the Australian Government ‘get a guy in India selling bags to collect tax for the Australia Government?’ Not possible, right? Wrong. It happened. We believe this is what will happen with cryptocurrency.
If you spend a few minutes researching news about bitcoin and grabbed the headlines, you will notice that no one can agree on one opinion.
There are headlines ranging from it’s completely safe and all the experts recommend it, to experts saying it should be outlawed, to headlines claiming it’s a bubble…to it’s the next Uber and it’s here to say.
Cryptocurrency is new. No one really knows where it’s going to end up and how it’ll look when the dust settles. So, if you’re going to invest, you need to do your research, get a clear idea of your investing outcomes and objectives, put parameters in place to minimize your losses and then go play.
So what? And what does any of this mean to property investors? Whether you’re into cryptocurrency, whether you’re ready to go play, whether you’re sitting back and deciding, or perhaps you’re ignoring the hype… for property investors and property lovers…here’s where the concept of cryptocurrency gets very interesting. Pay attention.
As you can see by this news headline, the market is speculating on buying and selling property using cryptocurrency.
Ok. Yes. So what? What will could this potentially mean for property investors?
Firstly, it’s the end of the 30-day settlement timeframe that we all know and love to hate. Instead, what could happen are instant, same-day settlements. This is what could occur.
If that occurs, this means there could be no need for Banks (in the future). No need for loans, and no need for loan documents. And no need for an entire industry that is employed to be part of the mortgage broking industry. Like finance brokers. Like Banks loan department. Loan processors. And all the admin roles required behind the scenes.
I’ll just paint a picture for you, pretend this happened. Pretend cryptocurrency wiped out the mortgage broking industry.
How many finance brokers are there currently in Australia? Do they know they could become obsolete? If they became obsolute overnight (say in a 2 year period) just imagine how this would drive-up the unemployment rate of Australia. And how in turn that would affect the property market and interest rates.
Makes for the plot of a science fiction movie, right?
Property is certainly not ‘the newest shiniest thing’ like cryptocurrencies, but it continues to be a sure thing when you know how to read the property clock.
As you know, the most successful strategies is all about knowing when to get in, and when to exit. This is the scientific approach to investing.
Since this information is widely available to online researchers, it helps and guides investors to know where and how to make their next move. The great thing about investing in property in comparison to cryptocurrency is that you have time to think, research, to get sure, and then act.
The share of Aussies who rent a home has risen from 27% in 1991 to 31% now. That could well suggest plenty of pent-up demand for the great Australian dream (and increasing prices pushing people out of the buying market).
Cryptocurrency. It’s important that you do your research, and then go play. Have fun. And play with what you’re willing to lose. As with anything, do your research. And if you’re going to play, and you make some money, then you’ll need assistance with your tax.
Play with the minority of your money. Keep the majority of your investing money for real assets, like property.
Your ultimate goal — turn all your cryptocurrency into real assets ASAP.
So if you make any money in cryptocurrency, turn it into cash and use it for deposits or pay-down your current mortgages. Cycle any earnings into the property.
References: ¹http://www.telegraph.co.uk/news/science/science-news/8316534/Welcome-to-the-information-age-174-newspapers-a-day.html ²http://www.smh.com.au/business/banking-and-finance/bitcoin-can-buy-you-citizenship-in-one-of-the-happiest-countries-20171012-gz03i8.html ³https://www.finder.com.au/how-cryptocurrency-do-you-need-to-buy-an-australian-house ᶣhttp://www.abs.gov.au/ausstats/abs@.nsf/0/1647509ef7e25faaca2568a900154b63